Rep. Frank J. Mautino

Filed: 4/13/2015

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 2617

2    AMENDMENT NO. ______. Amend House Bill 2617 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Insurance Code is amended by
5changing Section 155.39 as follows:
 
6    (215 ILCS 5/155.39)
7    Sec. 155.39. Vehicle protection products.
8    (a) As used in this Section:
9    "Administrator" means a third party other than the
10warrantor who is designated by the warrantor to be responsible
11for the administration of vehicle protection product
12warranties.
13    "Incidental costs" means expenses specified in the vehicle
14protection product warranty incurred by the warranty holder
15related to the failure of the vehicle protection product to
16perform as provided in the warranty. Incidental costs may

 

 

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1include, without limitation, insurance policy deductibles,
2rental vehicle charges, the difference between the actual value
3of the stolen vehicle at the time of theft and the cost of a
4replacement vehicle, sales taxes, registration fees,
5transaction fees, and mechanical inspection fees.
6    "Vehicle protection product" means a protective chemical,
7vehicle protection device, system, or service that is (i)
8installed on or applied to a vehicle, (ii) is designed to
9prevent loss or damage to a vehicle from a specific cause,
10(iii) includes a written warranty by a warrantor that provides
11if the vehicle protection product fails to prevent loss or
12damage to a vehicle from a specific cause, that the warranty
13holder shall be paid specified incidental costs by the
14warrantor as a result of the failure of the vehicle protection
15product to perform pursuant to the terms of the warranty, and
16(iv) the warrantor's liability is covered by a warranty
17reimbursement insurance policy. The term "vehicle protection
18product" shall include, without limitation, protective
19chemicals, alarm systems, body part marking products, steering
20locks, window etch products, pedal and ignition locks, fuel and
21ignition kill switches, and electronic, radio, and satellite
22tracking devices. "Vehicle protection product" does not
23include fuel additives, oil additives, or other chemical
24products applied to the engine, transmission, or fuel system of
25a motor vehicle.
26    "Vehicle protection product warrantor" or "warrantor"

 

 

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1means a person who is contractually obligated to the warranty
2holder under the terms of the vehicle protection product.
3Warrantor does not include an authorized insurer.
4    "Warranty reimbursement insurance policy" means a policy
5of insurance issued to the vehicle protection product warrantor
6to pay on behalf of the warrantor all covered contractual
7obligations incurred by the warrantor under the terms and
8conditions of the insured vehicle protection product
9warranties sold by the warrantor. The warranty reimbursement
10insurance policy shall be issued by an insurer authorized to do
11business in this State that has filed its policy form with the
12Department.
13    (b) No vehicle protection product sold or offered for sale
14in this State in compliance with this Section shall be subject
15to the provisions of this Code or the Service Contract Act
16unless it is offered as a service contract as defined in
17Section 5 of the Service Contract Act.
18    Vehicle protection product warrantors and related vehicle
19protection product sellers and warranty administrators
20complying with this Section are not required to comply with and
21are not subject to any other provision of this Code or the
22Service Contract Act unless it is offered as a service contract
23as defined in Section 5 of the Service Contract Act. The
24vehicle protection products' written warranties are express
25warranties and not insurance.
26    (c) This Section applies to all vehicle protection products

 

 

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1sold or offered for sale prior to, on, or after the effective
2date of this amendatory Act of the 93rd General Assembly. The
3enactment of this Section does not imply that vehicle
4protection products should have been subject to regulation
5under this Code prior to the enactment of this Section. The
6changes made to this Section by this amendatory Act of the 99th
7General Assembly do not imply that vehicle protection products
8should have been subject to regulation under this Code or the
9Service Contract Act prior to this amendatory Act.
10(Source: P.A. 95-331, eff. 8-21-07.)
 
11    Section 10. The Service Contract Act is amended by changing
12Sections 5 and 35 as follows:
 
13    (215 ILCS 152/5)
14    Sec. 5. Definitions.
15    "Department" means the Department of Insurance.
16    "Director" means the Director of Insurance.
17    "Road hazard" means a hazard that is encountered while
18driving a motor vehicle, including, but not limited to,
19potholes, rocks, wood debris, metal parts, glass, plastic,
20curbs, and composite scraps.
21    "Service contract" means a contract or agreement whereby a
22service contract provider undertakes for a specified period of
23time, for separate and identifiable consideration, to perform
24the repair, replacement, or maintenance, or indemnification

 

 

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1for such services, of any automobile, system, or consumer
2product in connection with the operational or structural
3failure due to a defect in materials or workmanship, or normal
4wear and tear, with or without additional provision for
5incidental payment or indemnity under limited circumstances,
6for related expenses, including, but not limited to, towing,
7rental, and emergency road service. Service contracts may
8provide for:
9        (1) the repair, replacement, or maintenance of such
10    property for damage resulting from power surges and
11    accidental damage from handling;
12        (2) the repair or replacement of tires or wheels, or
13    both, on a motor vehicle damaged as the result of coming
14    into contact with road hazards;
15        (3) the removal of dents, dings, or creases on a motor
16    vehicle that can be repaired using the process of paintless
17    dent removal without affecting the existing paint finish
18    and without replacing vehicle body panels, sanding,
19    bonding, or painting;
20        (4) the repair of chips or cracks in or the replacement
21    of motor vehicle windshields as a result of damage caused
22    by road hazards;
23        (5) the replacement of a motor vehicle key or key-fob
24    in the event that the key or key-fob becomes inoperable or
25    is lost or stolen;
26        (6) the payment of specified incidental costs in the

 

 

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1    event that a protective chemical, substance, device, or
2    system, or service that (A) is installed on or applied to a
3    motor vehicle, (B) and is designed to prevent loss or
4    damage to a motor vehicle from a specific cause, and (C)
5    includes a written product warranty providing for payment
6    to or on behalf of the warranty holder's incidental costs
7    in the event that the product fails to prevent loss or
8    damage as specified; the reimbursement of incidental costs
9    under the warranty must be tied to the purchase of a
10    physical product that is formulated or designed to make the
11    specified loss or damage less likely to occur; however, a
12    protective chemical, device, system, or service that is
13    offered in compliance with and meets the definition of
14    "vehicle protection product" as defined in subsection (a)
15    of Section 155.39 of the Illinois Insurance Code shall not
16    be required to comply with this Act; or
17        (7) other services that may be approved by the
18    Director, if not inconsistent with other provisions of this
19    Act.
20Service contracts shall not include:
21        (i) contracts of limited duration that provide for
22    scheduled maintenance only;
23        (ii) fuel additives, oil additives, or other chemical
24    products applied to the engine, transmission, or fuel
25    system of a motor vehicle;
26        (iii) coverage for the repair or replacement, or both,

 

 

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1    of damage to the interior surfaces of a vehicle, or for
2    repair or replacement, or both, of damage to the exterior
3    paint or finish of a vehicle; however, such coverage may be
4    offered in connection with the sale of a protective
5    chemical, device, or system described in item (6) of this
6    definition.
7    "Service contract holder" means the person who purchases a
8service contract or a permitted transferee.
9    "Service contract provider" means a person who is
10contractually obligated to the service contract holder under
11the terms of the service contract. A service contract provider
12does not include an insurer.
13    "Service contract reimbursement insurance policy" means a
14policy of insurance that is issued to the service contract
15provider to provide reimbursement to the service contract
16provider or to pay on behalf of the service contract provider
17all covered contractual obligations incurred by the service
18contract provider under the terms and conditions of the insured
19service contracts issued or sold by the service contract
20provider.
21    "System" means the heating, cooling, plumbing, electrical,
22ventilation, or any other similar system of a home.
23(Source: P.A. 98-222, eff. 1-1-14.)
 
24    (215 ILCS 152/35)
25    Sec. 35. Cancellation and refunds.

 

 

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1    (a) No service contract may be issued, sold, or offered for
2sale in this State unless the service contract clearly states
3that the service contract holder is allowed to cancel the
4service contract. If the service contract holder elects
5cancellation, the service contract provider may retain a
6cancellation fee not to exceed the lesser of 10% of the service
7contract price or $50. The service contract cancellation
8provision must provide that the service contract may be
9cancelled:
10        (1) within 30 days after its purchase if no service has
11    been provided and that a full refund of the service
12    contract consideration, less any cancellation fee stated
13    in the service contract will be paid to the service
14    contract holder; or
15        (2) at any other time and a pro rata refund of the
16    service contract consideration for the unexpired term of
17    the service contract, based on the number of elapsed
18    months, miles, hours, or such other reasonably applicable
19    measure which is clearly disclosed in the service contract,
20    less the value of any service received, and any
21    cancellation fee stated in the service contract will be
22    paid to the service contract holder.
23    (b) In the event that a service contract includes the
24coverage described in paragraph (6) of the definition of
25"service contract" in Section 5 of this Act, the service
26contract provider must refund the service contract purchase

 

 

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1price in accordance with this Section but is not required to
2refund the protective chemical, device, system, or service;
3however, the service contract provider may elect to refund the
4purchase price of the protective chemical, device, system, or
5service if the terms of that refund are clearly stated in the
6service contract. The coverage described in paragraph (6) of
7the definition of "service contract" in Section 5 of this Act
8may not be offered as, or within, a service contract unless the
9service contract clearly states whether or not the service
10contract holder is entitled to a refund of the purchase price
11of the protective chemical, device, system, or service and, if
12applicable, the terms of such refund.
13(Source: P.A. 90-711, eff. 8-7-98.)".